Employment Protection (Consolidation) Act 1978

123 Payment of unpaid contributions to occupational pension scheme. E+W+S

(1) If, on application made to him in writing by the persons competent to act in respect of an occupational pension scheme [F1 or a personal pension scheme], the Secretary of State is satisfied that an employer has become insolvent and that at the time that he did so there remained unpaid relevant contributions falling to be paid by him to the scheme, the Secretary of State shall, subject to the provisions of this section, pay into the resources of the scheme out of [F2 the National Insurance Fund] the sum which in his opinion is payable in respect of the unpaid relevant contributions.

(2) In this section “relevant contributions” means contributions falling to be paid by an employer [F3 to an occupational pension scheme or a personal pension scheme], either on his own account or on behalf of an employee; and for the purposes of this section a contribution of any amount shall not be treated as falling to be paid on behalf of an employee unless a sum equal to that amount has been deducted from the pay of the employee by way of a contribution from him.

(3) The sum payable under this section in respect of unpaid contributions of an employer on his own account to an occupational pension scheme [F1 or a personal pension scheme] shall be the least of the following amounts—

(a) the balance of relevant contributions remaining unpaid on the date when he became insolvent and payable by the employer on his own account to the scheme in respect of the twelve months immediately preceding that date;

(b) the amount certified by an actuary to be necessary for the purpose of meeting the liability of the scheme on dissolution to pay the benefits provided by the scheme to or in respect of the employees of the employer;

(c) an amount equal to ten per cent. of the total amount of remuneration paid or payable to those employees in respect of the twelve months immediately preceding the date on which the employer became insolvent.

(4) For the purposes of subsection (3)(c), “remuneration” includes holiday pay, [F4 statutory sick pay, statutory maternity pay under Part V of the Social Security Act [F5 1986 or Part XII of the Social Security Contributions and Benefits Act 1992,] maternity pay under Part III of this Act] and any such payment as is referred to in [F6 section 122(4)].

(5) Any sum payable under this section in respect of unpaid contributions on behalf of an employee shall not exceed the amount deducted from the pay of the employee in respect of the employee’s contributions to the F7 scheme during the twelve months immediately preceding the date on which the employer became insolvent

(6) The provisions of subsections (7) to (9) shall apply in a case where one of the following officers (hereafter in this section referred to as the “relevant officer”) has been or is required to be appointed in connection with the employer’s insolvency, that is to say, a trustee in bankruptcy, a liquidator [F8 an administrator], a receiver or manager, or a trustee under a composition or arrangement between the employer and his creditors or under a trust deed for his creditors executed by the employer; and in this subsection [F9 “trustee”, in relation to a composition or arrangement, includes the supervisor of a [F10 voluntary arrangement proposed for the purposes of, and approved under, Part I or VIII of the Insolvency Act 1986]].

(7) Subject to subsection (9), the Secretary of State shall not in such a case make any payment under this section in respect of unpaid relevant contributions until he has received a statement from the relevant officer of the amount of relevant contributions which appear to have been unpaid on the date on which the employer became insolvent and to remain unpaid; and the relevant officer shall, on request by the Secretary of State provide him, as soon as reasonably practicable, with such a statement.

(8) Subject to subsection (9), an amount shall be taken to be payable, paid or deducted as mentioned in subsection (3)(a) or (c) or subsection (5), only if it is so certified by the relevant officer.

[F11 (9) If the Secretary of State is satisfied—

(a) that he does not require a statement under subsection (7) in order to determine the amount of relevant contributions that was unpaid on the date on which the employer became insolvent and remains unpaid, or

(b) that he does not require a certificate under subsection (8) in order to determine the amounts payable, paid or deducted as mentioned in subsections (3)(a) and (c) and (5),

he may make a payment under this section in respect of the contributions in question without having received such a statement or (as the case may be) such a certificate.]

Textual Amendments

F1 Words inserted by Social Security Act 1986 (c. 50, SIF 113:1), s. 86(1), Sch. 10 Pt. I para. 31(1)(a)

F2 Words substituted by Employment Act 1990 (c. 38, SIF 43:5), s. 16(1), Sch. 2 para. 1(4)

F3 Words inserted by Social Security Act 1986 (c. 50, SIF 113:1), s. 86(1), Sch. 10 Pt. I para. 31(2)

F4 Words substituted by Social Security Act 1986 (c. 50, SIF 113:1), s. 86(1), Sch. 10 Pt. IV para. 76

F5 Words in s. 123(4) substituted (1.7.1992) by virtue of Social Security (Consequential Provisions) Act 1992 (c. 6), ss. 4, 7(2), Sch. 2 para.49.

F6 Words substituted by Insolvency Act 1985 (c. 65, SIF 66), s. 235(1), Sch. 8 para. 31(3)

F7 Words repealed by Social Security Act 1986 (c. 50 SIF 113:1), s. 86(2), Sch. 11

F8 Words inserted by Insolvency Act 1985 (c. 65, SIF 66), s. 235(1), Sch. 8 para. 31(3)(b)(i)

F9 Words substituted by Insolvency Act 1985 (c. 65, SIF 66), s. 235, Sch. 8 para. 31(3)(b)(ii)

F10 Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F11 S. 123(9) substituted by Employment Act 1989 (c. 38, SIF 43:1), ss. 18(3), 29(6), Sch. 9 para. 4(1)

Modifications etc. (not altering text)

C1 S. 123 restricted by Dock Work Act 1989 (c. 13, SIF 43:5), s. 7(5), Sch. 2 para. 7(2)

C2 S. 123 modified by Dock Work Act 1989 (c. 13, SIF 43:5), s. 7(5), Sch. 2 para. 7(2)(b)